‘Notorious’ or ‘Scapegoat’: Alibaba, Trump Administration Trade Barbs

Accused as still “notorious” by the Trump administration, Alibaba shot back on Friday that it was being treated as a geopolitical “scapegoat” amid rising protectionism.So goes the continuing war of words over the issue of counterfeits. Oddly, both sides agree that the Chinese e-commerce giant’s system to protect intellectual property on its Taobao.com marketplace is getting better.The latest tit for tat came after the Office of U.S. Trade Representative Robert Lighthizer named Taobao.com to its list of markets singled out for carrying goods that are either counterfeit or trademark twisting. The list, which amounts to a public shaming of companies that are seen as needing to do more, is nothing new. Taobao.com was also considered “notorious” when the Obama administration put together its previous iteration in late 2016.“The Notorious Markets List highlights prominent and illustrative examples of online and physical marketplaces that reportedly engage in, facilitate, turn a blind eye to, or benefit from substantial piracy and counterfeiting,” said the report, released by USTR’s office Friday. “A goal of the list is to motivate appropriate action by owners, operators and service providers in the private sector of these and similar markets, as well as governments, to reduce piracy and counterfeiting.”A spokesman for Alibaba said: “As a result of the rise of trade protectionism, Alibaba has been turned into a scapegoat by the USTR to win points in a highly politicized environment and their actions should be recognized for what they are. The USTR’s actions made it clear that the Notorious Markets List, which only targets non-U.S. marketplaces, is not about intellectual property protection, but just another instrument to achieve the U.S. government’s geopolitical objectives. Alibaba reiterates our point of view: We will continue to strengthen our IP protection system with world leading technology and a collaborative approach with brands and other stakeholders. Our efforts and results speak for themselves: more than 100,000 brands, including 75 percent of the world’s most valuable consumer brands, do business on our platform.”The spokesman stressed that Alibaba “not only met but dramatically exceeded the USTR’s 2016 requests,” noting the company took multiple steps to simplify the process for right holders to request enforcement action, make good faith takedown procedures available, reduce Taobao.com’s timelines for takedowns and penalize counterfeit sellers.The report from the USTR gave Taobao.com credit for improvements, but said more needs to be done.“A high volume of infringing products reportedly continue to be offered for sale and sold on Taobao.com and stakeholders continue to report challenges and burdens associated with IP enforcement on the platform,” the USTR said. “In particular, [small- and medium-sized enterprises] continue to have problems accessing and utilizing takedown procedures on Taobao.com. In 2017, more SMEs have requested assistance from U.S. government agencies and embassies regarding Taobao.com than any other e-commerce platform….Alibaba has undertaken efforts, some within the last six months, to curb the offer and sale of infringing products on Taobao.com, and some right holders report an improved outlook as a result. At the same time, the prevalence of infringing listings and sales continues to be a challenge and there are additional steps Alibaba must take to address ongoing concerns.”The report noted Alibaba has said it created a one-stop site for take down requests and closed more than 230,000 Taobao.com vendors for selling IP-infringing goods over a recent one-year period."We commend Alibaba for its efforts to date," the USTR said. "While Alibaba presented its considerable efforts to address many concerns identified in the 2016 list, important unresolved concerns remain. For example, Alibaba has not identified metrics to assess objectively the scale of infringing products sold on Taobao.com nor objectively demonstrated that the volume or prevalence of counterfeit goods has decreased over the last year.”The report suggested that over the next year Alibaba should take a number of steps to improve its IP protections, including referring criminal leads to Chinese authorities, improving the effectiveness of its repeat infringer policy and giving copyright holders contact information on infringing sellers.“It is incumbent upon Alibaba to develop more effective means to address the concerns of the full range of U.S. businesses that continue to find infringing versions of their products for sale on Taobao.com,” the USTR said. “Alibaba must not relax its efforts to combat counterfeiting and piracy on Taobao.com and other platforms. We ask affected industries and Alibaba to report back expeditiously on the status of Alibaba’s continued IP enforcement efforts on Taobao.com. The U.S. will continue to closely monitor recent and prospective reforms.”

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